LUBBOCK, Texas – The office of Texas Attorney General on Tuesday filed an objection to converting the Reagor Dykes bankruptcy case from Chapter 11 (reorganization) to Chapter 7 (liquidation).
Reagor Dykes filed for bankruptcy in August 2018 amid allegations of fraud and default. To date, twelve former employees admitted to committing federal crimes. Among the problems in the bankruptcy, people who purchased vehicles from Reagor Dykes in the days and weeks leading up to August 1, 2018 did not get titles.
“Debtors resolved approximately 90% of the initial consumer issues, a laudable effort,” the office of Texas Attorney General wrote. The AG also wrote that about 100 customers still do not have titles to their vehicles.
“The State has worked constructively with the Counsel for Debtors and as well as Counsel for Mr. Richard Dykes in these last few weeks to salvage some hope for the Consumers,” the AG wrote in the bankruptcy case.
“[Lawyers for Reagor Dykes and] Mr. Rick Dykes are putting the final touches to a settlement that should resolve the balance of the remaining consumer issues,” the AG wrote. Changing the nature of the bankruptcy case would interfere with the settlement, the AG wrote.
The objection said in part:
“The keystone of the settlement is that it would provide new money contributed by Mr. Dykes and expressly earmarked to fund a Consumer Ombudsman who would be a fiduciary working on behalf of the consumers. None of the seed money, or any subsequent funds from litigation proceeds would be used to pay claims, therefore this settlement would not disrupt the priority scheme of §507. The State looks forward to discussing this possible Settlement with the Court and will provide more details at the hearing. As this would be a significant benefit to the Consumers and would be part of a Liquidating plan, the State respectfully requests that the Court deny the Motions to Convert.”
The office of U.S. Trustee in December requested the case be converted to Chapter 7. A hearing was scheduled for Tuesday, February 12.
CLICK HERE to comment, react or share on Facebook.